KBRA releases its quarterly report highlighting our Chief Strategist Van Hesser’s view on key economic indicators, as well as what he identifies as the most influential factors driving credit markets in the upcoming quarter. The report also examines credit market valuations in the context of current and future market conditions.

Key factors driving credit market conditions in Q1 include better-than-expected economic growth amid a surge in technology-related capital expenditure, a powerful wealth effect resulting from a historic rise in stocks, a productivity boom, easy financial conditions, and less policy uncertainty.

Looking ahead, we are monitoring four factors that could materially impact credit markets. First, policy developments, both in the U.S. and abroad. Recent developments remind us that policy uncertainty has not disappeared, and that any number of tail risks could emerge to impact risk premia. Second, the path of inflation. While moving close to target, we believe risks to pricing pressure are to the upside, fueled by upcoming stimulus, a strong wealth effect from rising stock markets, and accommodative financial conditions. Third, late-cycle credit accidents. Are the handful of high-profile credit meltdowns observed in 2H 2025 merely the tip of the iceberg? Fourth, the promise of artificial intelligence (AI). Are there indications that expected value creation may ultimately fall short of the scale of investment?

Click here to view the report.

Related Publications

• Van Hesser's 3 Things in Credit - A KBRA Podcast
• Gordon Kerr's Credit Compass: Navigating European Credit Markets

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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